Following her return to New Zealand in 1976, McDonald played the role of Shirley Paget in the television soap opera Close to Home.[2][5] She also played Beryl in the original television adaptation of Roger Hall's play Glide Time.

From the late 1970s McDonald's best-known character, "Lyn of Tawa", was seen on New Zealand television in her own series (the theme song to which was a remake of the instrumental tune "The Happy Organ"), as well as in a monologue during the 1981 Royal Variety Performance at the St James Theatre, Auckland. Lyn reappeared in the 1990s in In Search of the Great New Zealand Male and Visual Symphonies.[2]

In 1979, McDonald portrayed cheerful mother-to-be Sandra Allenby opposite Stephen Tozer in the tele-movie It's Your Child.[6] She played the title character in the 1983 television drama Pioneer Women – Hera Ngoungou.[7] In 1989 she appeared as Lady Guinevere Galaxy in the children's sci-fi television series Space Knights.[8]

During the 1990s, McDonald's acting credits included Dead Certs (1995) alongside Rawiri Paratene, Face Value – Her New Life (1995)—which she also produced[2]—and Duggan (1999).[1] She also presented the New Zealand version of the garden makeover show Ground Force from 1998 to 1999.[1] She played June Ramsay in the 1997 production of Anthony McCarten's play Four Cities at Circa Theatre in Wellington.[1]

McDonald's alter ego, "Lyn of Tawa", first appeared onstage as a result of a backstage encounter between McDonald and playwright Bruce Mason in the late 1960s, in which Mason heard McDonald experiment with various accents. McDonald subsequently created "Lyn of Tawa" and, together with Mason and Roger Hall, wrote a series of sketches featuring the character for the revue show Knickers. It was, however, after McDonald's return from London that Lyn really came to prominence, following her appearance at a celebrity roast for Judith Fyfe, which led to spots on variety shows, then one-off special and culminated in her own series.[2]

She said in 2016 that she would let go of Lyn of Tawa to take on older roles.[11][12]

McDonald made her debut as a television director and producer on the final series of Gliding On. She also directed episodes of Close to Home, Open House and Country GP. McDonald produced the award-winning kidult television series The Fire-Raiser, written by Maurice Gee, and was the creator and producer of the 1987 series Peppermint Twist. She also produced another series written by Maurice Gee, The Champion, in 1989. Other programmes produced by McDonald include the television adaptations of the 1997 play Nga Wahine by Riwia Brown, and Joyful and Triumphant by Robert Lord.[2]

In 1970 McDonald won the Hollywood Bowl radio award for best voice commercial.[1] She was twice named best actress at the Feltex Awards, in 1980 and 1984, for her roles in Pioneer Women and It's Your Child, respectively.[13] In 1989, she won the best drama and best children's programme trophies for The Fire-Raiser at the GOFTA awards, and also won an Australian Pater Award for producer of the best drama series for the same show.[1] McDonald was a nominated finalist for Face Value – Her New Life at the Banff and New York Television Festivals.[14]